Ministers have “more work to do” to help farmers, Labour MPs have privately admitted amid a backlash over the decision to charge more inheritance tax on agricultural land.
The Conservatives have accused the Government of a “betrayal” of farmers and the Liberal Democrats say ministers have shown “a lack of understanding of rural communities”.
Rachel Reeves announced in Wednesday’s Budget that agricultural property relief from inheritance tax would become much less generous.
Farmland was previously exempt from the levy entirely, to enable families to hand down their farms through the generations, but from 2026 only properties worth £1m or less will be excluded with a tax of 20 per cent – half the normal inheritance tax rate – applied to anything above that threshold.
Senior Tories accused Labour of breaking a pre-election promise not to water down the relief and warned that the change would end the tradition of family farms.
Launching a petition against the move, shadow Environment Secretary Steve Barclay said: “Labour’s introduction of the family farm tax marks a shameful betrayal of British farmers everywhere. It will harm rural communities, risk our food security, and make it harder to pass farms to the next generation.”
Patrick Spencer, the MP for Central Suffolk & North Ipswich, added: “Farmers are the custodians of our countryside and their relationship with our land, unlike the Chancellor’s own economic whims, spans generations, not just news cycles.”
Lib Dem leader Sir Ed Davey said his party would also vote against the measure in Parliament.
He told journalists: “I think it shows a huge lack of understanding of rural communities and farms and how they operate on a number levels. Farms tend to go down generation to generation. That’s how they work, and it’s really important for rural communities that they do, and it’s really important for farming because it’s such a long-term investment in so many cases.”
Labour backbenchers – many of whom won rural constituencies from the Conservatives at this year’s general election – are largely supportive of the change to inheritance, although they acknowledge that the Government must reassure farmers they are not being abandoned.
“There are many measures in the Budget that will support businesses up and down the country,” one MP told i. “I will continue to advocate for support for farmers in my constituency, as there is more work to do to help independent farms, which are the lifeblood of our countryside.”
Another backbencher said: “The package offered to the farming community in the budget goes a good way to help improve long-term stability.”
And a third Labour MP added: “The sort of farms we’re talking about are big, aristocratic farms. Most of the farmers in my constituency are tenant farmers. They won’t be affected by this. In fact, if some of these larger farms have to sell up, they could offer a right to buy to their tenants.”
Business minister Douglas Alexander defended the policy in the House of Commons, saying: “I’m aware of the concerns that have been raised in relation to inheritance tax, but frankly there are difficult and necessary choices that had to be made yesterday.”